Across Asia, regional markets are mixed following the wild ride in overnight equity markets that saw the US and European
indices close sharply lower. After larger falls on the open, the major indexes have rallied to be trading well off their
lows. The Shanghai Composite and Kospi are the best performers, up 0.4% and 0.3% while the Hang Seng and Nikkei 225 are
both down 1.2%.
In Australia, the ASX 200 is currently 0.1% weaker having traded in a massive 109 point range. Once again volatility is
off the charts with heavy early losses giving way to most of the market turning convincingly positive before again
rolling over. As things currently stand, most of the main sector indices are in the red with the energy, materials,
industrial and financial sectors all lower between 0.5% and 1%. A strong result from Telstra is seeing the telecoms
sector as the standout performer of the session with a gain of more than 4.5%.
Today’s session has been pretty spectacular, highlighted by ‘off the charts’ volatility. It looks like there have been
some big buy orders in the market, which have been flicked on and off by computers. Late morning marked the first jump
higher as the market put on nearly 80 points in an hour. The buying then dried up, resulting in a fall of 50 points
before it seems the tap was turned on again, triggering a 40 point jump.
The sharply weaker employment data released at 11.30am could have been one of the catalysts, as analysts started
throwing in the towel on remaining rate hike expectations and instigating fresh cut forecasts. The jobless rate
unexpectedly rose to 5.1% from 4.9% while 100 jobs were lost versus expectations for more than 10,000 to have been
created. It seems everyone but the RBA is asking for a rate cut with today’s weaker than expected employment figures
intensifying the calls for a confidence booster from the central bank.
Whatever the reason may be, it’s good to finally see the Australian market outperform. When we awoke this morning to
falls of more than 4% everyone thought we were set for another blood bath. Whilst the open was still weak, the lack of
indiscriminate selling has been very encouraging, as has the significant buying interest. The Australian market has
underperformed global markets for at least the last 18 months; perhaps we could be witnessing the beginning of a period
of outperformance as Australian equities get re-weighted based on our relative economic strength when compared to other